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This paper aims to focus on the deep‐seated ideological, economic, and social roots of the notion and practice of profit sharing in French enterprise, from a historical perspective. Although this practice is legally mandated in France today, this paper seeks to identify the historical roots of such practices and to locate them in the ideological, social, and economic domains of discourse.

The authors provide a brief review of the literature on profit sharing and identify the current knowledge on the relationship between profit sharing and firm performance, in addition to the motivations for implementing profit sharing and its non‐financial consequences.

From the mid‐nineteenth century onwards, profit sharing entailed more than just a few anecdotal experiments and actually raised a number of deep‐seated ideological, economic and social questions. The French practice of profit sharing has a profoundly “social responsibility” argument at its base. De Gaulle's argument for this was embedded in a broader rhetoric of finding a third alternative between unbridled capitalism and unrestricted socialism, and one that could ameliorate the human condition.

Psychological ownership among employees can be promoted through profit sharing and employee ownership programs.

It is critical for managers to ensure the success of profit sharing schemes by providing for higher levels of employee voice and including employee involvement programs.

Whereas the ideological basis (social responsibility), had a dominant impact in France, in the evolution of such practices leading up to their legislation other countries focused more on the instrumental and utilitarian benefits.

The authors use the approach of historical analysis of profit sharing practices in France to draw cross‐national lessons for today's managers around the globe.

Schemes of profit sharing and employee share‐holding have a 19th century origin. The objects of profit sharing vary according to its proponents. The primary focus of this paper will be on managerial schemes of financial participation and the expectations that their installation will lead to an improvement in organizational performance and employee behaviour. Using a survey of 2,827 private sector firms in 11 European countries we test for the effect of profit sharing on profitability, productivity and employee turnover and absenteeism. In addition, the effect of profit sharing on union influence is examined. In common, with other research in this area, our results show that while there is some evidence of a positive relationship between profit sharing and organizational performance, this was not definitive. In the case of union influence, there was some evidence of an adverse effect of these schemes on the solidarity of the collective.

This paper aims to map some of the diversity in employee relations in Germany that is overlooked, first, within assessments of the German labour market that focus on the national level and second, within separate studies in this area that emphasize attempts by employers to circumvent important institutions.

The research adopts a quantitative approach to examine data for German manufacturing and service sectors on both the spread of industry‐wide collective agreements and the extent to which workers are paid wage rates that are higher than those set out in those agreements. It also assesses the prevalence of profit sharing and employee share ownership schemes.

Industry‐wide collective agreements are not the burden that they are often portrayed. Actual wage rates and the prevalence of profit sharing and ESOSs make German workplaces more heterogeneous than critics and advocates of the German economic model posit.

The data are limited to Germany; however, Germany occupies a prominent position, not just within much of the employment relations literature, but also in terms of economic output. The research is also limited by an inability to provide evidence on workplaces that undercut sectoral collective agreements and to disaggregate the data further by sector and firm size/location.

The paper provides a counterpoint to the portrayals of employee relations in Germany that often present a homogeneous picture of those relations. For the first time, data on the spread of profit sharing and employee share ownership schemes in German workplaces at the sectoral level are provided.

The purpose of this paper is to explore how various performance related pay (PRP) schemes influence employee turnover. It also tests whether profit sharing has a differential impact on turnover in comparison to other forms of PRP.

Utilizing a nationally representative longitudinal dataset of individuals, analysis begins with a parsimonious specification of the determinants of turnover and then progressively adds various sets of controls known to influence turnover decisions to observe how their inclusion influences PRP coefficients. Estimations employ both standard probits and panel data models.

Empirical evidence reveals a negative relationship between an aggregate measure of PRP and turnover. Disaggregating performance pay measures by type reveals a robust negative relationship between profit sharing and turnover. Although one would expect the influence of other PRP schemes to mimic that of profit sharing, evidence suggests otherwise.

Data lack information on how much earnings are based on PRP. Consequently, estimates may be biased when combining those who receive little earnings from PRP with those who receive substantial amounts of PRP into a single PRP measure.

Although PRP schemes are often introduced to improve incentives and productivity, profit sharing based on firm profitability may allow labor costs to vary with firm profits hence enhancing retention and reducing the incidence of unemployment during recession.

This paper adds to the literature and fulfils an identified need to study how other types of PRP besides profit sharing influence turnover.

To analyse productivity effects of performance‐related pay (PRP).

Fixed effect analysis of the productivity effects of the introduction of PRP scheme using linked employer‐employee data from Finland in 1996‐2002 and controlling for the skill structure of the employees.

PRP improves both productivity and profitability by the same magnitude of around 6 per cent, but only if the compensations are substantial enough and exceeding on average 3.6 per cent of salaries for those who receive it. Incentive effects relate to the introduction of PRP, usually accompanied by new human resource management. PRP in Finland cannot, however, be directly linked to an increase in participation of employees in decision‐making. PRP schemes have substantially improved firm performance without creating much wage pressures.

Useful information for the implementation and design of incentive‐based wage schemes.

Very few papers using large data sets have information on exact PRP payments that are separate from bonus pay or piece wages.

The purpose of this paper is to provide an overview of the development of employee financial participation in Estonia from patterns of employee ownership which was promoted during the privatization of enterprises in the transition period, to the emergence of different forms of employee participation, including employee share ownership and profit sharing schemes. The analysis of the changing institutional setting and legislation in Estonia in the context of EU accession serves as a basis for examining the actual diversification of forms of employee financial participation, and provides some suggestions of likely further development.

The study combines results from earlier research, analysis of Estonian legislation from the late 1980s to the present time, interviews with social partners, data collected through enterprise surveys during the transition period and case studies, examining recent examples of financial participation.

There is no historical tradition of employee financial participation in Estonia. By far the most important development was in relation to early privatization, with the employee takeover of many small enterprises. However, majority ownership by employees in these firms has changed quite rapidly, so that now the dominant ownership pattern is of ownership by managers and outside owners. This phenomenon was observed both in quantitative studies and in case studies. There are very few cases of profit sharing. The need to transform acquis communautaire into national law in connection with the EU accession has recently led to debates about employee participation in decision making. Although the government and other influential political players do not promote financial participation, the discussion on the implementation of EU directives shows that the issue will be addressed and even new legislation could be adopted if an EU act on financial participation of employees were approved.

In contrast with employee share ownership, the incidence of which was quite recently assessed in a survey study of January 2005 for 722 enterprises, profit sharing has not been the subject of regular and/or recent studies. Thus, one should be cautious when estimating the extent of the spread of diverse forms of financial participation in Estonian companies.

Description of the current status of employee financial participation can be important for policy makers for further development of the labour market in Estonia. Development of legislation following the trend in the EU, together with changes in the taxation system, could promote different forms of financial participation by employees, and could lead to strengthening employee motivation and productivity, especially in knowledge‐based companies.

The paper is a comprehensive description of the development and current status of employee financial participation in Estonia. The paper provides suggestions for further research.

The purpose of this paper is to discuss Islamic laws which are relevant to finance. More specifically, it covers the types of contracts as foundation for the distinctive Islamic financial products. The current institutional framework of financial institutions seems to be incompatible with the nature of these Islamic contracts.

This is a conceptual paper describing the link between finance and economic growth in the present of Islamic contracts, which have various types from contract of partnership, buy‐sale contract, to contract of usufructs. The nature of Islamic contract is to avoid riba (i.e. interest system), because it is unjust and prohibited, meanwhile under conventional system they rely very much on the interest system.

The conclusion of the paper is that the distinctive character of Islamic contracts applied by Islamic banking and finance relies mostly on the profit and loss sharing mechanism which contains the cooperative spirit, in the contracts such as mudharabah (profit‐sharing), musharakah (partnership). The development of equity partnership instruments in the financial system necessitates a different set of regulation and institutions in order to achieve Islamic goal through economic/financial activities.

This paper opines that the current framework of financial institutions does not match with the nature of Islamic contracts.

This paper suggests that a new framework for financial institutions is necessary in order to accomplish the maqasid‐al‐shariah, by implementing the true spirit of cooperative through various Islamic contracts. Consequently, the rules and regulations and other relevant elements also need to adjust.

The paper indicates a possible different consequence on the link between finance and growth in the presence of Islamic contracts, i.e. a more positive relation.

The purpose of this paper is to explore the shortcomings in the compliance of the full‐fledged Islamic banks with the Bank Negara Malaysia (BNM) disclosure guidelines related to the profit sharing investment accounts (PSIAs).

This study uses interviews and a survey.

It was found that only two out five full‐fledged Islamic banks followed BNM guidelines which are based on the idea of self‐regulation. The authors developed a checklist of disclosure items, and probed whether the sample banks would adopt these new disclosure items. As it transpired, some banks have been disclosing these items selectively, and/or recording them for internal control and management purposes. The findings show these banks do not disclose: policies, procedures, product design and structure; profit allocation basis, methodology of calculating profit attributable to investment account holders (IAHs). Nevertheless, disclosure related to Shari'ah compliance was given to a reasonable extent. It is intriguing that full‐fledged Islamic banks do not provide comprehensive disclosure related to PSIAs because such disclosure is not mandatory; while foreign full‐fledged Islamic banks provided such disclosure voluntarily.

The banking sector regulator is not sure of whether individual Islamic banks have actually complied with all of its guidelines. The shortcomings in the disclosure are due to lack of expertise, outdated information system structure, and shortage of support and highly trained staff. The authors propose that the Islamic jurists should use Istiqra – which is a comprehensive examination of contracting environment before a new definite ruling is made on the issue of accountability to the IAHs. This would involve exploratory study of how the securities regulator (not banking regulator) perceives the information risks faced by the IAHs and enforce new disclosure guidelines.

This paper proposes new disclosure guidelines which incorporate transparency, appropriateness, and timeliness to reduce information asymmetry and enhance governance disclosure.

PROGRAMME Evaluation and Review Technique, familiarly known as PERT, is a vital subject which is growing rapidly. Recognition of this drew an interested audience to a symposium at Keele University on July 13, when 14 companies contributed papers on different aspects of critical path‐planning techniques and their experience as users in such disparate fields as shipbuilding, aviation, nuclear and civil engineering, the chemical and electrical industries, and management consultancy.

The purpose of this article is to examine the outcomes of a substantial broad‐based employee share‐ownership scheme for employee attitudes and behaviour in a privatised firm.

Results are based on a survey of 711 employees in Eircom, an Irish telecommunications firm, which is 35 percent employee‐owned.

The ESOP has created sizable financial returns and has had extensive influence in firm governance at the strategic level. However, findings show only a limited impact on employee attitudes and behaviour. This is attributed to a failure in creating a sense of employee participation and line of sight between employee performance and reward.

The aim of employee share‐ownership often includes aligning employee objectives with those of other shareholders, and thus improving labour performance. The findings in this study highlight a need to provide employees with a sense of ownership and control. Findings also question the assumption that where employees have a substantial shareholding, they will focus on securing the long‐term prospects of the firm.

Little research has examined the impact of a large employee shareholding on attitudes and behaviour within a public‐quoted firm. The substantial and unparalleled size of the Eircom ESOP presented a unique opportunity to conduct such a study.